Commentary:

Positive comments from Intel after Thursday’s close caused a sharp opening gap up in the Nasdaq, and particularly the Semiconductors, on Friday, but the excitement quickly faded and the Nasdaq trended lower throughout the day. Nevertheless, the Nasdaq Composite still managed to close 0.2% higher, making a 2.2% gain for the week. Both the S&P 500 and Dow Jones Industrial Average gained 0.1% on choppy trading action. Total market volume in the NYSE was 12% lighter than the previous day, while volume in the Nasdaq was about the same.

On a technical basis, not much has changed within the major indices during the past two days. The S&P 500 is sitting at a new 52-week high, but the Nasdaq is still having trouble with its prior high from January 2004. Though it traded above it on an intraday basis, the Nasdaq has been unable to close above the prior high of 2,152. The Dow is also still below its prior highs, further diverging from the strength of the S&P 500. If all three major indices were trading at new highs, we would be more inclined to be bullish due to the lack of overhead supply. But, when the indices diverge as they have been, it becomes tricky. However, there is no good reason to initiate broad-based short positions here either. So, we will see what plays out over the next several days and how it affects the daily and weekly charts before taking more of a stance in the market. For now, cash is a good idea because the long positions now carry a negative risk/reward ratio, but shorts do too.

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Today’s watch list:

There are no new plays for today. We remain long PPH.

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Daily Reality Report:

Below is Morpheus Trading Group’s daily
performance report of closed trades and an update on all open positions from The
Wagner Daily (Intraday Real-Time Room trades are reported separately in The
Wagner Weekly). Net P/L figures are based on the quantity of shares represented
in the MTG Position Sizing Model.

Closed Positions:

(none)

Open Positions:

PPH long (from Nov. 30) –
bought 69.10, stop 69.20, target 72.90, unrealized points = + 1.12, unrealized P/L = + $112

Notes:

No changes to the PPH stop.

Edited by Deron Wagner,
MTG Founder and
President